Question

part b

Suppose that a market is described by the following supply and demand equations Q = 2P QP = 300-P a. Solve for the equilibrium price and the equilibrium quantity. Calculate the consumer and producer surplus 2P =300-P P 2100 Equilibrium price quantity Q = 2(000) =200 Equilibri Suplus: A ABL = ²2 Consumer b. Suppose that a tax of 10 is placed on buyers, so the new demand equation is Q" = 300 - (P+10) Solve for the new equilibrium. What happens to the price received by sellers, the price paid by buyers, and the quantity sold?

Answer 1

08-21 & - 300-1 ca QS=2 When peo osco By plotting this we get the supply cuore. 0-300-P When P-0 0-300 I when 80' P=300 By plotting this, we get the demand curre. At equilibrium / os. O - 22=300-P I P = love - Equilibrium price - 8 = 30o-loo 10 = 200) - Equilibrium quantity Consumer surplus = 10.5) (300 - 100) (200) = $20,000 Producer surplus= (0.5) (600-0) (200) = $10,000 3PT 300

(67 Suppose that & tad of lo is placed on buyers. The new demand equation is - 300- (P + 16) The new equilibrium is os= 8 2p=300- (Pto) 2P = 300 - P-10 3P = 290 IP = 96.67 So, frice received by sellers = ($96.67 And price paid by buyer = $(9667+ 10) Quantity = 2696.67) = 19 3.34 units I 19 3.34 units tobolt loo 96675 Demand | 6 19359 29 Boo 9